New United Hanger at Dulles - Analyst Blog

By: Zacks.com

Posted: 11/25/2013 6:07:00 PM

Referenced Stocks: BA;DAL;LCC;UAL

United Airlines - the wholly owned subsidiary of
United Continental Holdings Inc.
(
UAL
) - opened a new maintenance hangar at Washington Dulles
International Airport, which is a major hub for the carrier to
connect with the Middle Eastern market. The hangar will be
operational from next month.

The new facility - being constructed at an investment of
around $45 million -is capable of holding two wide-bodied or
several narrow-bodied aircraft simultaneously. Wide-bodied
aircraft includes
The Boeing Co.
's (
BA
) B-747, 767, 777 and 787 range and European manufacturer
Airbus's A-330, 340, 350 and 380 range. The 1,25,000 square feet
hangar includes 85,000 square feet of covered aircraft space.

United provides daily non-stop service from Washington Dulles
to the oil rich nations of UAE, Qatar and Kuwait, which continue
to be some of the important markets for U.S. carriers. The new
facility is expected to reduce the out-of-service time of an
aircraft thus optimizing fleet utilization.

The new hangar adds to United's existing facilities at
Chicago, Houston, Cleveland, Los Angeles, San Francisco. The
company is building another hangar at Newark Liberty
International Airport.

Recently, United chalked out plans to overhaul its finances as
the airline behemoth has financially underperformed its domestic
peers in recent times. The Chicago-based company plans to reduce
its annual costs by $2 billion by cutting fuel cost, reducing
sourcing cost, improving maintenance and optimizing distribution
channels. We believe that the new hangar is part of the
initiative to improve productivity of the aircraft.

Recently,
US Airways Group Inc.
(
LCC
) and American Airlines Inc, a subsidiary of AMR Corp. received
clearance from the Department of Justice for their proposed
merger, which will create the largest global carrier. This in
turn will increase competition for legacy U.S. carriers like
United and
Delta Airlines Inc.
(
DAL
). Building these new facilities will strengthen United's base
and make it more competitive in an important airport like
Dulles.